Has Anyone heard of a 401a plan & Info re partial rollovers.
If I remember correctly my retirement office told me that their plan is a 401(a) but I haven’t found any info regarding that.
I rolled over 50% of my pension funds to an IRA and based by RMD on 50% of my balance on 12/31/10. The company wanted to use the RMD based on 100% of my balance. Seeing that the remaining funds stayed with the Pension Fund I questioned that distribution on the amount rolled over to the new Ira Account so they finally agreed as the calculated pension distributions was based on my lifetime expectancy. I hope that this goes through correctly as the RMDs for additional years will be calculated on my new and previous IRA and my Deferred Comp balances. It seems the pension fund must have any RMD’s built into their payouts??????
sch
Permalink Submitted by Alan Spross on Wed, 2012-04-11 23:13
It is difficult to understand all the issues here since they are interrelated. A 401a is a qualified plan and the Deferred Comp is not a qualified plan, but both are subject to separate RMDs.
In the year you retire and also take a distribution from the plan, RMDs should be held out of any rollovers you do. From your other post it appears that there was a large amount that you did not roll over, expecting to use the 10 year tax option that was disqualified because of the IRA rollover. However, there probably was enough funds included in the distribution you did not roll over to cover your RMD.
So yes, the RMDs should be included when the plan calculates how much can be rolled over to an IRA. You probably satisfied the RMD plus much more.
The same thing will happen with the deferred Comp 457 plan. If you are taking distributions, the RMD will be included in the distributions. If you decide to roll over any remaining balance in that plan to an IRA in a different year, the plan will have to calculate how much to distribute to you as the RMD portion, and no part of an RMD amount can be rolled over. Also, note that the RMD can be satisfied by either pre tax distributions or after tax distributions, so your entire RMD is not necessarily taxable. But the 457 plan is probably all pre tax so that RMD would be fully taxable.
Permalink Submitted by Shirley Hall on Thu, 2012-04-12 02:27
Well since I had 1/2 of my pre-tax contributions paid out to me from my retirement fund if there is any penalties involved as a result of the rollover then it should not be as high as I might have anticipated but hopefully it should be appropriate without any additional tax consequences. They withheld a 20% tax on what was determined to be the RMD on 50% of the balance on 12/31/10.
BTW you are the first person that I have found who knows what a 401(a) pension fund is. I searched the net quite a bit and could not find information on 401(a) plans.
Thanks for your consistent input. It has helped a lot in completing my income tax for this year.
SCH.